Monday, September 29, 2008

I saw this blog post and almost let it tempt me to carp about the distortion that ideology can bring to the writing of history. Too often I encounter articles and whole books that are long on imagination and way too short on citations to primary sources, or even citations to good secondary ones. These histories don't usually contain too many PoMo terms with the exception of one that always makes my skin crawl: hermeneutics. It shows up in constructions such as Hermeneutics: "Analytical" and "Dialectical"; Hume, Hermeneutics, and History: A "Sympathetic" Account; Galileo and Spinoza: Heroes, Heretics, and Hermeneutics; and Erasmus and the Hermeneutics of Linguistic Praxis. I know the definition of the word, but I can't see that it's used as much more than BS in the stuff I read.

OK so I did carp a little, but my goal is to celebrate the generosity of some publishers. I've lately been struggling with a stage-setting segment of the thesis I'm drafting and wish to say something about the well-being of certain segments of the population of London in the middle of the seventeenth century. I found reviews of a book that looks like it contains information that would be helpful. It didn't seem so important that I should spend big bucks ordering a copy and then waiting for it to arrive. I couldn't look it over in Google Book Search since it hasn't showed up there yet. Amazon doesn't give snippets in its Search Inside service. I started looking to see what I'd have to pay for a used copy and, on doing an author/title search in Google was very pleasantly surprised to find that that the publisher, U of Calif Press, has made the whole thing available in a very nice format on the eScholarship site.

So ... I'm happily perusing the book, copying bits into my note-taking wiki (wikidpad), and making tactical decisions on how to make use of them in the draft.

Saturday, September 27, 2008

I've got myself a free subscription to the Financial Times courtesy my UK student status. FT is considered to be right-of-center so its comments on the US election might be thought to slant toward the Republican candidate. But as with conservative columnist George Will this does not seem to be the case.

Before last night's debate the FT leader writer assessed the candidates on the financial crisis and gave Obama the edge: "Ordinary economic competence, which Mr McCain particularly appears to lack, may be less important than grace under pressure. Readiness to take charge and ability to inspire some confidence will be the real test. In this, Mr Obama has done better than his rival. Mr McCain’s instinct for decisive action has led him astray: his initial interventions were ill-judged and poorly received. Mr Obama’s tendency to intellectual detachment has been much criticised hitherto, including by many Democrats, but has now come into its own. Whereas Mr McCain has seemed rattled, Mr Obama has seemed calm and methodical. The Democrat’s impeccable taste in advisers – men such as Paul Volcker, whom voters are inclined to trust in an economic emergency – has also served him well."

This morning two FT columnists tip the same way.

Gideon Rachman says McCain showed his age while rambling about the economy but seemed more on top of things when the subject turned to "stuff he actually cares and knows about." He says Obama wasn't much better on the crisis but did have four succinct points to make at the beginning; contrast McCain who "gave the impression that he thought that the source of the problem is excessive spending in Congress."

Clive Crook liked Obama's performance much better than McCain's: "After the last couple of days, McCain badly needed to win Friday’s debate. My immediate feeling was that he didn’t even manage a draw. Obama was on fine form. He did not meander. His responses were calm and focused. He never looked rattled. He seemed comfortable with the issues and unthreatened by his opponent — sufficiently unthreatened to be generous to McCain now and then, an effective Clintonian (Bill) touch. McCain was prickly, rarely looking in Obama’s direction, repeatedly accusing him of failing to understand the issues — a difficult charge to make stick with Obama looking so assured. McCain’s aggression seemed to me at times to betray a lack of confidence. He had his moments; still, I thought it was a comfortable win on points for Obama."

Friday, September 26, 2008

Pearlstein says some things that have been on my mind lately. His column today -- Gut Check -- says:

1. It's not a good time for vindictiveness, for revenge, for playing the blame game. He says: "You can try to prevent a financial meltdown or you can teach Wall Street a lesson, but you can't do both at the same time."

2. The US is really close to a massive cascade of bank failures. He says: "All it would take is one more hit to trigger the modern-day equivalent of a nationwide bank run. Financial institutions would fail, part of your savings would be wiped out, jobs would be lost and a lot of economic activity would grind to a halt. Such a debacle would cost us a lot more than $700 billion."

3. The bailout involves sales as well as purchases. He says: "The latest proposal hammered out between the Treasury and Democratic leaders won't cost anywhere near $700 billion unless we get a 1930s-like Depression, in which case we'll have much bigger problems to worry about."

4. Legislators should not pretend they are members of the executive branch. Nor should they use legislative oversight and the power of legislation to hamstring executive branch specialists. He says: "It is important to give the Treasury secretary and the people he hires a good deal of flexibility in designing and experimenting with the mechanics of this rescue."

The head of Bank of America gives weight to point 2. He says banks are hoarding cash, refusing to extend credit, and credit is what makes the economy run. His bank is sound and will benefit from the failure of weak banks (by buying up assets cheaply). Nonetheless he doesn't want banks to fail. There's a serious risk that the current economic pessimism will escalate into panic. He says: "Right now, the flow of funds that makes our economy run is threatened by a lack of confidence in the value of financial assets, particularly mortgage assets. Financial institutions are extremely hesitant to purchase assets or lend money to one another to fund the system. Just as optimism in times of growth encourages an upward trend, pessimism in uncertain times can feed a downward trend. Allowing such a trend to gain strength is our great risk." (Main Street Needs the Treasury Plan)

A Wall Street Journal blog says the political posturing of Southern Republicans in congress -- a populist melange of vindictiveness combined with grasping for a share in the payout -- is being quietly supported by McCain: "McCain didn’t create the House rebellion, but at least temporarily, we are seeing an interesting partnership between House Republicans and John McCain. When I asked one GOP Hill staffer whether McCain was serving as a proxy for House Republicans, I was told that such a claim would be too strong but that McCain is, at the very least, trying to give voice to House Republicans skeptical of the bailout. And if that’s true, McCain will have an opportunity to bring them along–or some of them–to get a deal.” (Political Wisdom: A Wild Day Spawns Questions About McCain)

Wednesday, September 24, 2008

I've been interested in the expansion of commerce in 17th-century England; particularly interested in the importance of credit, and, with regard to credit, particularly interested in the importance of trust. Partly for that reason I recently read Jane Jacobs's Systems of Survival which sets out to explain a pair of competing moral systems: the guardian syndrome and the commerce syndrome. She derives these syndromes from the behaviors two occupational groups: the one evolved from aristocratic moral structures and the other from the moral structures of businessmen. It's a good read. The guardians are those who govern, who run the bureaucracy, and who dispense justice. They trust only their own kind and strictly by the rules of honor (which give plenty of latitude for deception). In contrast, commercial people treasure honesty, not for its own sake but because trading requires trust.

Jacobs isn't saying these moral codes are observed by everyone all the time, but that each group has ways to enforce its own precepts. They both try to minimize deviation from their own specific norms. She also isn't saying that these two competing syndromes comprise all the rules that people strive to follow in their attempts to lead good lives. These are simply the ones that separate the one group from the other. I've put a table showing the two lists at bottom.

Jacobs points out that guardian group must step in when the morals of the commerce group break down. That is to say governments regulate commerce for the good of citizens. Though there are ideologies that regret this intervention, almost everyone regards it as necessary. She also says governments can't actually perform the functions of the commercial group -- government run business operations rarely succeed. (She says they never do). That's because the moral structures are inimicable. It's an interesting way of looking at things; basically an update on a position that Plato has Socrates take. There's a quick summary in this pdf document.

So now we're seeing government debate what to do to correct the mess created by the big New York banks (and others). You can look at the arguments from a Systems-of-Survival point of view.

Political systems, communities, markets all share one common characteristic -- at their core, they all require a level of trust among the participants if they are going to work. In recent years, we have allowed that trust to erode to the point that our political system is paralyzed by partisan bickering and communities are fractured into enclaves of race and class. Now markets are collapsing because investors realize they have been misled by corporate executives, investment banks, ratings agencies and regulators. As a country, there is an urgent need to rebuild that trust. In different ways, that is what both the McCain and Obama campaigns are all about. And it is the same challenge that now faces us in this financial crisis.

Where Pearlstein writes about the trust we should be able to place in large financial institutions, an academic blogger writes, indirectly, about the trust we should be able to place in our military. In a post called Counterinsurgency Comes Home, he writes about an Iraq-seasoned infantry brigade being deployed to "help the people at home" through sophisticated military action to counter civil unrest. The blogger has first-hand knowledge since he's currently serving in the Army in Kuwait. (He writes for Cliopatria, a group blog, and is a historian in graduate school at UCLA.) If you read the whole article from which he quotes, the unit sound more helpful than threatening (Brigade homeland tours start Oct. 1). But, in light of the misplaced trust that has produced so many horrors in recent years, including the current financial crisis, you have to wonder. Why do we need Army specialists to do the job the National Guard is tasked to perform? There used to be fears of large standing armies which might subvert the rights of citizens. As James Madison put it in Anti-Federalist Papers No. 10 of 24 January 1788,

The liberties of a people are in danger from a large standing army, not only because the rulers may employ them for the purposes of supporting themselves in any usurpations of power, which they may see proper to exercise, but there is great hazard, that an army will subvert the forms of the government, under whose authority, they are raised, and establish one, according to the pleasure of their leader.

We no longer have quite that fear, but with the drastic undermining of civil liberties in the current war on terror and the embracing of torture as a judicial tool, and all else that increases the power of the state to coerce its citizens, there is very good reason to withhold trust when the Army says its deploying a seasoned combat-ready force on our own territory for our own good.

Monday, September 22, 2008

Who's to blame for the financial crisis that the US Treasury is now trying to mitigate? Its seriousness is obvious enough. How else explain the restraint our politicians are struggling to achieve? How even comprehend the quantities of money involved -- a trillion dollars or more in Federal payments and guarantees?

Press coverage is, understandably, vast. I note only three: two by a Washington Post business columnist and one by a hedge fund operator. Reading them I wonder what's happened to us? What's happened to US citizens, we who once prided ourselves on thrift and now are overwhelmed with mortgage and credit card debt? What happened between the Depression generation of tightwads and those intervening generations of more and more laid back consumers?

The press writes as if Americans who spend the earnings tomorrow may never bring are simply victims. What does that say about our collective intelligence and integrity, our collective power as voters in this democracy? Many of us seem to have caved in, given up, stopped t_h_i_n_k_i_n_g.

I also wonder about the rest of the world, so intertwined with the US economy that they suffer with us, some even more than us. And the rest of the world, too, who sustain our outrageous debt -- our government, household, and and corporate debt that cannot be funded without this foreign support. Have they become so dependent on the US as the world engine of prosperity that they cannot do otherwise?

I wonder but am unable to predict what will happen.

After my comments on the three commentators, I've put some info on Charles MacKay's old and interesting book.

In the first article, commentator Steven Pearlstein says that "when you strip away all the complexity and trappings from the magnificent new global infrastructure, finance is still a confidence game." But he says the bankers wouldn't have been able to work their con if the US economy hadn't been artificially buoyed up by low interest rates over the last decade. And he says Greenspan and the Fed were able to keep interest rates so low because foreigners remained willing to buy American debt instruments, American securities, American real estate and other assets of all sorts. Low interest rates provided Americans with cheap money. Households borrowed heavily "to buy houses, cars and college educations, along with more health care, extra vacations and all manner of consumer goods and governments used the cheap money to pay for services and benefits that citizens were not willing to pay for with higher taxes." When this credit bubble began to frighten foreign investors, the big New York banks found a way to keep these investors happy by inventing new credit instruments and working their con to keep the bubble growing. That meant that the inevitable bursting was a much more serious event than almost any previous meltdown (it's being compared to the 1929 crash of course).

Pearlstein says that the financial restructuring that we're now seeing should "force some financial discipline on the majority of U.S. households that relied on borrowed money to maintain their lifestyles," but he says it probably won't.

In the second article Pearlstein says the scale of the event is mind boggling but not so great that it can't be controlled. This week should show us life being lived normally in most US households and most companies outside Wall Street. The securities markets should return to normal. The main effect will prove to be a new way of looking at free market ideology: "There is little doubt we are witnessing a once-in-a-generation sea change. It will no longer be an easy applause line for a politician to declare that government is the problem and that markets always know better than regulators and politicians. Debates about the competitiveness of U.S. financial markets will focus less on how little regulated they are and more on how much protection and transparency they offer to investors. It will be harder to deny essential government agencies the talent, money and respect they need to do the job right."

He closes by addressing the confidence of foreign investors in the US economy: "No doubt there will be those who see in this crisis further proof of the inevitable decline of the United States as a world economic power. In fact, it may be just the opposite. The wild swings over the past week in financial markets from Moscow to Mumbai, were only the most recent reminder of the increasingly global nature of capital flows and the risks of financial contagion. They also were a reminder that, in times of stress, global investors still seek refuge in the safety of the U.S. dollar, U.S. Treasuries and the skillful crisis management of U.S. policy makers."

The opinion piece by the hedge fund operator is Calling Out the Culprits Who Caused the Crisis, by Eric D. Hovde. He's an interesting character. A financier who's wealthy enough to own both an investment bank and commercial banks, and also runs a hedge fund, he's not a sleazy character, but rather one who strongly supports charitable activity here and abroad. It's also obvious from this article that he's one who is blunt in his criticisms of his own industry.

Like Pearlstein he says the historically low interest rates put in place by the Greenspan Fed created a toxic environment for the US economy. The New York bankers who took advantage of this environment simple threw away all the internal checks that traditionally kept the banking business sound. He say the price of all this greed is an estimated $1 trillion and more in losses. While giving Greenspan much of the blame, he also says "One has to wonder why Treasury secretaries under Presidents Clinton and Bush -- Robert Rubin and Hank Paulson, respectively -- took no action to curb these abuses."

He says we might have gotten some help from congressional oversight if the financial industry hadn't corrupted congress: "The Wall Street investment banking firms, their executives, their families and their political action committees contribute more to U.S. Senate and House campaigns than any other industry in America. By sprinkling some of its massive gains into the pockets of our elected officials, Wall Street bought itself protection from any tough government enforcement."

He leaves us with no prognosis but only a wish: "there has not been a time since the 1920s when Wall Street has enjoyed as much influence over Washington as it has for the last 12 years. Let's hope that this influence fades rapidly -- and that this financial crisis doesn't end the same way as the one of nearly 80 years ago."

Here's the old and ever-popular book I mentioned at top. MacKay was one of the first to notice how easily people get carried away and how dreadful the results can be.

Sunday, September 14, 2008

PezCycling News has some good photos of the climax of yesterday's demanding stage in the Vuelta, Spain's version of the Tour de France.

The race narrative on the Pez site gives an indication of just how demanding is the climb to the finish: "Billed as the hardest day on the hardest climb of this year's La Vuelta a España, in fact it’s been billed as the hardest climb anywhere in any stage race." Its winding track of a road is steep, of course. The weather is commonly abominable, thought yesterday it was only cold, not cold, wet, and windy. And the altitude is way up there. The summit is 1,570 metres (5,200 ft) above sea level, from bottom to top, racers had to ascend 1,248 m (4,090 ft), and near the summit the slope is over 20%.

Today, a Pez article by Ed Hood gives some nice photos, including these. Note the helicopter in the background of the first one. The second one shows the race leader coming through on his own.

Friday, September 12, 2008

Lately I've been reading -- or at least skimming -- lots of math texts from the 17th-century and occasionally something interesting catches my eye. The books and the culture of technical education in which they nest were both monotonously masculine. There were advocates for teaching math to women but the objective of authors and students alike was mostly the preparation of young men for jobs in merchants' offices and trademen's shops.

This morning I was looking at one of the most popular of all these books, William Mather's Young Man's Companion, a comprehensive work of instruction and reference that went through 24 editions between 1681 and 1775. What caught my eye was a reference to a pamphlet he wrote about the invidious meddling of women in the affairs of men. It's called A Novelty: Or, A Government Of Women Distinct From Men, Erected Amoungst Some Of The People, Call'd Quakers. Published in 1694, it complains about the power held by Quaker women in Bedfordshire at the time.

{The image shows a Quaker woman preaching ca. 1675.}

The worst offense, in Mather's view, was that these women would interview young couples who wished to marry. In the words of one who defended the practice, the women would "enquire and see that things be clear on all parts on so weighty a concern as marriage." Susan Dinan explains the purpose of these interviews in a recent monograph.

Mather devotes a couple dozen pages to his reasons why it was improper for a woman to "meddle in the making of marriages unless of her own children and servants." Likening the meeting to an official court of inquiry, he says "the greatest wonder of all is, that such a government should be practised amonst a people that profess that every individual man and woman should have no other guide besides Christ's inward and spiritual grace," and he says he is proud to have earned the rebuke of George Fox himself: "But if you now say to me, as G.F. [i.e., George Fox] said to me ... in a discourse with him, till near mid-night, about the said arbitrary government, 'you do not deserve to have wives,' (saith he) 'you speak too much against women.' to say the truth, this was the best argument he could give us, for his unscriptual female government."

Mather had become a Quaker nearly 35 years before writing this and was to return to the Church of England the next year. George Fox was of course the founder of the Religious Society of Friends. As bold as he was peaceful, his writings make for very interesting reading. Answering Mather and other critics, he strongly defended the right of women to participate in decision-making via Monthly and Quarterly Meetings and to interview couples who wished to marry.

{The image shows Fox in an engraving taken from a contemporary painting.}

Here is the text of a letter -- which Mather quotes -- which summarizes the immediate object of his displeasure:

Friends in Bedford-shire,

Here came Stephen Scarborrow, to acquaint Friends of his Intention of Marriage with Marry Samm, Daughter of Nathaniel Stamm of Litlington, in Bedford-shire; as also he did to our Quarterly Meeting about a Month ago, and Friends did tenderly advise him to acquaint our Women Friends therewith, who attend Meetings to serve Truth in their Day Age, and Generation, and to enquire and see that things be clear on all parts on so weighty a Concern as Marriage; but he refusing to follow Friend's Advice herein, I know not what the Women-Friends may have to say in this Matter: Now I being one that have had some Exercise and Concern in these our Meetings, I do testifie, That that Spirit that doth oppose the good Order in publishing Marriage in Men and Women's Meetings, is not of God, and am sorry for the Young Man, and desire he may live to see his Weakness, and amend; so with Love to all Friends of Truth, rest a Friend to the same Truth. -- Tobias Hardmeat.

Here is the title page of the pamphlet:

Here is the catalog entry for it:

Mather, W., fl. 1695.

A novelty: or, a government of vvomen distinct from men, erected amoungst some of the people, call'd Quakers. Detected in an epistle, occasionally written to a man-judge, upon a young man's refusing (for good conscience sake) to submit to their authority in marriage, seeing that relations and friends were already satisfied. To which is added, a lamentation for the fall of so many of that people. Published for no other end, but to deter all honest hearts of the said people, from erecting the like unscriptural government. Tho' this may not so far prevail with such women as has a secret command of their husbands purses; together with those preachers that reap profit by such a female government, as to consent to the disanulling the same. Written by William Mather, a dear lover of the said people, who has for several years been much troubled, that some of them should fall from there primitive institution, as to set up women's and men's meetings, as guides in government, ... . , London : printed for Sarah Howkins, in George-yard, Lumbard-street, [1694?]Date: 1694Bib name / number: Wing (2nd ed.) / M1284CBib name / number: Smith, J. Catalogue of Friends' Books / II, p. 162No. pages: 23, [1] p.Copy from: Friends' Library, London, England

Today, Sept 12, the Washington Post gives new evidence of perjury used to convict and then execute Ethel Rosenberg some 55 years ago. I was 11 when she was put to death. She was my Mom's age. She and her husband Julius had two sons one of whom later became a college classmate of mine. Her electrocution was ugly, an ugly event at a time when immorally ambitious men put themselves at the head of a mob of frightened citizens not caring what damage they would do to the Constitution and the ideals on which the United States was founded. Our home was only a few miles from Sing Sing Prison. At the time they pulled the switch to kill Ethel Rosenberg we said we could see the lights dim. That is not a literal fact, but -- more powerfully I think -- a metaphorical one.

Monday, September 08, 2008

The betrayal of public trust which is a main topic of that post seems ordinarily to lead to re-establishment of public trust via government regulation. This happened in the case of the South Sea Bubble, the Crash of '29, and the abuses of which G.B.S. wrote. It's happening as government agencies work to mitigate the damage of the sub-prime loans crisis and it's happening in an outfall of that crisis: the near collapse of the two largest US mortgage organizations, Freddie and Fannie.

Steven Paulson, author of the piece on pin-stripe immorality I wrote about yesterday, has today a good summary of the F&F takeover. Notice that he makes connection to the New Deal policies of FDR. (There's an indirect connection here with the founding of the Greenbelt community in Maryland, part of the context of yesterday's post.) Notice also that he tells us market regulation is not only necessary to correct problems created by the workings of the market, but also that regulation is needed to prevent future crises of a like nature.

Fannie and then Freddie began promising Wall Street double-digit earnings growth, which required them to grow their balance sheets well beyond what was necessary to assure liquidity in the mortgage market. Instead of just buying mortgages, insuring them and selling them in packages to investors, they bought more of them for their own portfolios, using ever-increasing amounts of borrowed money. Buying their own securities was profitable, but it left them highly exposed if anything went really wrong with the housing market, which is exactly what has happened.

Not since the early days of the Roosevelt administration, at the depth of the Great Depression, has the government taken such a direct role in the workings of the financial system.

Paulson only implicitly notices something that's the subject of another post that caught my attention this morning: people do not generally respond well when some resource that has been scarce suddenly becomes abundant. In the case of the South Sea Bubble, the industrial expansion of he late 19th-century, the stock market expansion that ended in 1929, and other economic excesses, governments stepped in to correct abuses and restore order.

In the following blog post Chris Anderson writes about other sorts of over-abundance and their consequences:

It takes a generation or two to figure out how to properly use some resource that used to be scarce but is now abundant. [For example the resource of] time, which we got more of in the prosperous decades after the Second World War. For the first few generations, we chose to fill that time with television. Only now are we learning to fill it more productively, and to greater satisfaction. To use Clay's term, it took fifty years for us to learn how to tap the cognitive surplus that came after the five-day work week.

[Chris quotes Clay: Another example is the 18th-century rush of agricultural populations to cities. In that case] "the critical technology, for the early phase of the industrial revolution, was gin. The transformation from rural to urban life was so sudden, and so wrenching, that the only thing society could do to manage was to drink itself into a stupor for a generation. The stories from that era are amazing—there were gin pushcarts working their way through the streets of London.

"And it wasn't until society woke up from that collective bender that we actually started to get the institutional structures that we associate with the industrial revolution today. Things like public libraries and museums, increasingly broad education for children, elected leaders—a lot of things we like—didn't happen until having all of those people together stopped seeming like a crisis and started seeming like an asset."

[Chris says:] This is the same phenomena that I described earlier, using a computer science analogy rather than an economic one, as the "awesome power of spare cycles."

A commenter adds: "Now consider this from the perspective of the developing world and especially China/India. What happens when the majority of the population shifts from spending 24 hours a day just surviving to having spare cycles to do something else?"

I find this very perceptive. We're seeing the consequences of that abundance with increasing frequency: huge increases in energy consumption, corresponding huge increases in pressure on the environment, acceleration of global warming, an agricultural crisis partly spawned by changes in the daily diet of Asians,.... And probably also an eventual shift in cultural dominance accompanying the shift in economic and political dominance from West to East.

Sunday, September 07, 2008

I apologize for the length of this. I'm too lazy to break it into bite-size pieces.

The thesis research I'm doing these days deals indirectly with the development of a credit-based economy in 17th century England. I'm studying ways of calculating interest received or paid and it's apparent that promises written out on pieces of paper served for money with growing frequency. Although shortages of coins, the dangers of carrying lots of coins, and the difficulties of calculating the true value of coins made credit transactions necessary, people were coming to see lots of other advantages.

At first the word "credit" carried all the weight of its multiple meanings. In particular it connoted trust, the assurance that both parties were committed and fully able to do exactly what they promised one another in the paper documents they signed. In time, merchants' courts evolved to enforce these promises making it unnecessary for one party to personally acquainted with the other. However, these courts came to have little influence over the speculative trading of some forms of credit transactions, in particular the buying and selling of securities -- the bonds that the government used to borrow from citizens and the stock issued by the East India Company and other trading ventures. Securities were a different form of credit, one much more subject to abuse than merchants' credit.

My research isn't concerned with the emerging stock exchanges in European cities of the time, but as it happens I'm reading a book that deals with the subject: David Liss's Conspiracy of Paper. It's an excellent amalgam of mystery story, historical novel, adventure tale, and exploration of chicanery on a huge scale. It is set in London at the time the South Sea Bubble and its hero takes us into the intricacies of that vast web of intrigue. Bit by bit the author unfolds the conspiracies, manipulations, and crimes of some of the wealthiest and most powerful men of the time -- men whose place in society and its institutions was one of public trust. The story thus concerns, in part, the abuse of trust.

If you know the story of the South Sea Bubble at all, you know that this massive abuse of trust led to the ruin of many English men and women from all walks of life.

{One of many images depicting the bubble mania, this comes from Harvard Business School's Baker Library}

{This is a detail from a contemporary print warning of the dangers of the mania.}

As it happens, too, we ate out last night at the New Deal Cafe in Greenbelt Maryland.

The play is about Mrs. Warren's profession, of course, but also about women's rights, the generational gap between a mother and daughter, the conflicting impulses of career and romance and of business and the arts. But it's also about people with wealth and social position who maintain an aura of probity while earning money in anti-social ways. In this sense, it compliments the Conspiracy of Paper and the betrayal of public trust. In fact, Shaw makes this connection fairly plain in speeches by two characters: the mother, Mrs. Warren herself, and her partner, Crofts. The latter, a Baronet, speaks of the financial dealings men of his class, including for example his brother the M.P. who "gets his 22 per cent out of a factory with 600 girls in it, and not one of them getting wages enough to live on." He says, "As long as you don't fly openly in the face of society, society doesn't ask any inconvenient questions; and it makes precious short work of the cads who do. There are no secrets better kept than the secrets everybody guesses." Later Mrs. Warren puts the matter a little more bluntly: "You think that people are what they pretend to be: that the way you were taught at school and college to think right and proper is the way things really are. But it's not: it's all only a pretense, to keep the cowardly slavish common run of people quiet. It's truth, gospel truth Vivie: the big people, the clever people, the managing people, all know it. They do as I do, and think what I think. I know plenty of them."

What is so telling about these stories [of financiers lying to their clients, regulators, and the public] -- and, rest assured, there will be many more before we're finished -- is that they come only a few years after these same companies reached similar settlements for defrauding many of the same investors during the telecom and dot-com boom. While the fraud back then had more to do with bogus research and accounting and manipulation of initial public offerings, it is clear that they sprang from the same slimy ethical culture that has produced the current credit crisis. Wall Street has become a fundamentally corrupt enterprise in which the motto is: "We'll do anything for a fee."

I refer not to the narrow legal definition of "corrupt," but to the general instinct to mislead clients, double-cross and collude with counterparties, and pull the wool over the eyes of investors. It is the kind of corruption grounded in the attitude that it's all just a game in which the only rules are "buyer beware" and "heads I win, tails you lose." In a corrupt business culture like that of modern-day Wall Street, cynicism is rampant, candor and accountability are first casualties, and a man is measured by the size of his bonus rather than the depth of his integrity. It's not so much immoral as amoral.

The tell-tale signs of this endemic corruption now litter the financial landscape.

To find it, look no farther than the televised bleatings of research directors and equity strategists who, until the last few weeks, were still talking about a stock market rebound in the second half of the year and have never once forecast a losing year for the S&P 500.

You can find it in the spectacularly misguided mergers and acquisitions that were conceived, negotiated, blessed and underwritten by investment bankers who are paid enormous fees no matter how things turn out for investors. Their latest bright idea: the merger of Fannie Mae and Freddie Mac.

It's right there in the Wall Street Journal, where it is reported without a trace of irony, that some master of the universe who was forced out of Citi for overseeing the loss of billions of dollars has been snatched up by Morgan Stanley while another is staked for a couple of billion dollars to start his own hedge fund.